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Digital mortgages is a balancing act: aggregator

The advent of digital mortgages has provided the next steps towards innovation in the mortgage process and the new COVID led changes will brace brokers for a new set of challenges in the coming years.

While delivering a digital mortgage experience has been a key point of focus for years, the coronavirus pandemic has forced lenders to rapidly digitise elements of the home loan process, with the industry now asking if this could be the new normal.

Speaking on the Mortgage Business Webcast: The Advent of Digital Mortgages, Stephen Moore, CEO of Choice and chairman of LIXI, said the appetite for digital mortgages in the future will depend on how you define digital and the way it is used.

“If you said a digital mortgage is one where there is no human interaction whatsoever, I think there is currently very little appetite for it,” he said.


“But if a digital mortgage is one where they include aspects such as face-to-face, then I think the answer is yes and the last six months of COVID has seen most loans being interacted in this format."

Mr Moore said the digital mortgages shouldn’t come down to absolutes, “either going completely digital or face-to-face” and said the key will be balancing the two.

“What we know is there are fantastic efficiency gains with digital but equally most people still want validation when it comes to lender selection and loan structure and that’s where face-to-face or video in many cases and service support provided by brokers is critical," he said.

"The marriage of the two is a big part of the future.”

Tony Carn, chief customer officer of NextGen.Net, said there will be a strong take up come 2021 and the key will be developing a more digitised process and infrastructure across the industry.

“It really comes down to what a fully digitalised mortgage experience looks like and I think it is really taking the human contact and the paper out of that completely.”

“We are very close to it but there is still a lot of opportunity to really build that proposition out more.”

But Mr Carn noted that the embrace of digitalised processes had taken a while taking a pandemic to force the changes and that it highlighted the importance for the industry’s need to embrace change and better overcome change management.

“A lot of these technologies were there already and that’s why addressing that process of change management is really important,” Mr Carn said.

“We are still in a world where processes are heavily embedded and that holds back that change, the technology can move a lot faster but it’s just held up by process most of the time.”

Mr Moore said that overcoming the barrier of change is always difficult with the fear of disruption playing a factor in driving adoption.

“For many brokers, the change of process and the way of doing business is very disruptive. A good broker will absolutely focus on efficiency in what they do,” Mr Moore said.

“As you soon as you change the process, people go backwards before they go forwards, so there is a natural resistance to adopting technology.”

“What we found is as a necessity there is a fantastic adoption for brokers to take up digital but understanding the various meanings of digital and the ways it is used is also important.”

“Where we are is a one-way street where the efficiency gains that brokers are now seeing from digital, is now the new habit and entrenched in business and that is a real positive.”

With BID coming into place in January, brokers are looking at what they can do to go above and beyond for consumers and Mr Carn said that the digitalisation of writing a mortgage can be interchanged towards becoming a trusted adviser.

“The start for me is the recognition that customers have various preferences when it comes to how they want to interact which will change over time,” Mr Carn said.

“Customers like to interact digitally for certain things and this will change over time too.”

Mr Moore added that being able to cater right across the board on how customers can choose to interact is critical from a broker’s perspective and the digitalisation of a mortgage is “really about a means to an end".

“It is about efficiency and the process for brokers to focus on what is the highest value add. There is no question brokers add enormous value to customers by understanding individual circumstances, tailoring up the right loan structure specifically for that customer,” he said.

“That all links back to the value of advice, the meaning of BID and digitalisation will be part of that differentiator for brokers as we move into a new environment in January where it becomes a legislative obligation.“

[Related: CDR poses risk and opportunities for brokers]

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